South Yorkshire Pension Fund to invest £80m in region

News & Press May 2 2019, Tristan

South Yorkshire Pension Authority has announced plans to ramp up its local investing efforts, committing £80m to lending aimed at supporting property development in Sheffield and extending an existing allocation to another Yorkshire-based property fund.

The Sheffield City Region Joint European Support for Sustainable Investment in City Areas fund has been allocated £80m in loans by SYPA.

The SCR Jessica fund, managed by real estate investment firm CBRE, was initially established in 2013 with £22m of investments by the authority into the SCR, and has so far deployed £25.5m of capital into the Yorkshire city.

The SYPA’s £80m allocation is its second round of investment in the urban development fund, which has £20m of debt available to lend and hopes to provide more than £300m of capital to the region.

Separately, the SYPA has invested £25m in residential and socially orientated properties in the region with St Bride’s Managers. The local authority fund originally invested in the St Bride’s White Rose Partnership, which invests in property across Yorkshire – including offices and hotels in the south of the county – but has recently agreed an extension focusing solely on the residential market.

Local and social impact investments make up a small but important part of the SYPA’s portfolio. The Local Government Pension Scheme member’s 25 per cent stake in the original White Rose Partnership fund amounts to just £12.9m, and its most recent £80m and £25m investments equate to 1.25 per cent of the scheme’s total assets.

The plan also holds other assets with some local element or impact, such as a private equity investment targeting the north of England, but does not class these as local investments.

George Graham, fund director at SYPA, says: “As a local authority pension fund, we have a strong connection to our locality, and if we can achieve the same returns at an appropriate level of risk through a local investment we will always consider it. However, local investments will only ever be a relatively small part of the overall fund in order to maintain an appropriate level of diversification.”

According to the latest SYPA annual report and accounts, the fund owns a number of properties in the UK collectively valued at around £650m. The diversified portfolio consists of commercial and residential properties.